MFs increase holdings in key index heavyweights in April

Mutual fund houses added index heavyweights such as Reliance Industries Ltd, Axis Bank, Tata Steel, HCL Technologies, State Bank of India (SBI), HDFC Ltd, Bajaj Finserv and UltraTech Cement in April, signalling a reversal of their stance in the past few months, data showed.

Reliance Industries received a net inflow of ₹1,751 crore, Axis Bank ( ₹1,454 crore), Tata Steel ( ₹1,288 crore), HCL Tech ( ₹890 crore), SBI ( ₹734 crore) and HDFC ( ₹583 crore) in April, according to data sourced from Edelweiss Alternative Research and ACE MF.

Most equity fund categories received net inflows in April with categories such as mid-cap, large and mid-cap, and large-cap receiving significant flows. However, overall net inflows into equity mutual funds slumped 75% to ₹1,783 crore in April from ₹7,376 crore in March, Association of Mutual Funds in India (Amfi) data showed.

The top five stocks that were sold most by mutual funds were Vaibhav Global ( ₹4,057 crore), Infosys ( ₹1,326 crore), Vedanta ( ₹1,053 crore), JSW Steel ( ₹717 crore) and ITC ( ₹668 crore).

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The mid-cap data review shows that MFs bought the most in Ashok Leyland ( ₹315 crore), Page Industries ( ₹258 crore) and Hindustan Copper ( ₹217 crore). Among small-caps, they bought the most in Hathway Cable ( ₹209 crore), Dilip Buildcon ( ₹160 crore) and Rossari Biotech ( ₹128 crore).

In April, private banks (17.9%) was the top sector holding by mutual funds, followed by technology (11.1%), healthcare (7.8%) and non-banking financial companies or NBFCs (7.4%), according to data sourced from Amfi and NAV India and analysed by Motilal Oswal Financial Services Ltd.

The healthcare sector ranked third in the allocation of MFs compared to the fifth position in the year-ago period. The weight of metals increased for the third consecutive month to a 29-month high of 3.2% in April. However, the weight of consumer reached a 38-month low of 6.8%, falling 170 basis points year-on-year (y-o-y) in April because of which it slipped to the sixth position in the allocation of MFs from third spot a year ago.

“Mutual funds showed interest in healthcare, metals, chemicals and textiles, leading to a month-on-month increase in their weights. Real estate, consumer, cement, retail and consumer durables saw maximum decrease in value month-on-month,” said Deven Mistry, analyst, Motilal Oswal Financial Services.

In April, BSE Healthcare and Nifty Pharma gained around 10%. The Nifty IT index and Nifty Private Bank were down 1%.

Domestic institutional investors (DIIs) steadily bought shares in March and April, while foreign institutional investors dumped Indian equities. DIIs, which include mutual funds, insurance firms, banks, financial institutions and pension funds, were net buyers of equities worth ₹11,088.62 crore in April and ₹5,204.42 crore in March.

Equity assets under management (AUM) in domestic MFs (including ELSS and index funds) increased a marginal 1.2% m-o-m to ₹10.3 trillion in April despite bleak market sentiment.